The Blue Man Just Keeps Us Down . . .

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The AMD strategy to explain its lack of financial success seems to be morphing away from “wait for K10” to “It’s Intel’s fault.”

Business Week just had an interview with Hector Ruiz which was punctuated by some pretty outrageous claims:

“We have demonstrated over the last five years that every major innovation has come out of AMD, not out of Intel.”

Every one, huh? OK, IMC and HT are deserved thumbs up. I guess you’d have to include x86-64, even though it has had only minor impact on the overall PC world so far. Some might also include SOI, but I would argue that given all the problems AMD has had with it, that has been a net negative.

In contrast, Intel just has the better processors. I’m not exactly sure what new features fit in which innovation box, but C2D would seem to qualify for at least a couple.

“There is no question our market share today would be significantly higher if we had not been held back by Intel’s practices. It is strongly believed that we would be twice as large as we are—at a minimum—based on our innovation, efficiency, and leadership.”

Think about this. Look at AMD’s current product line. It’s just not as good as Intel’s, period. Look at their current marketshare, much of which is due to AMD’s bargain-basement pricing. You certainly can’t say you can’t find an AMD processor from most of the OEMs.

Can anyone besides Hector say with a straight face that AMD would have even more marketshare and get much higher prices for its current lineup except for evil Intel rebates? I certainly can’t.

This is not to say AMD might not be better off if Intel didn’t do certain things, but AMD would still be in fairly hot water now due to their (clearing throat) lack of recent innovation and big delays in getting new stuff out. Is that Intel’s fault, too?

But the literal accuracy or degree of delusion of the statements made in the article isn’t what’s important here. What I think is happening is that AMD is beginning to play its last card.

If the world economy doesn’t go south the next year, AMD will probably scrape through the next few quarters with asset sales, and if “real” K10s show up in quantity more or less on time, that should stop the big losses, leaving a living but seriously strapped company, certainly not able to finance its future capital (read fab) needs out of profits.

What I think we’re going to hear more in the year ahead is “We can’t succeed because The Blue Man just keeps us down. But don’t you worry, the good government guys are coming to the rescue and when they do and make things fair, we’ll be rolling in the dough.”

Indeed, if you look at those two convertible rights issues, you have to believe some have bought this Pied Piper’s new tune already.

The problem with that scenario is that Hector’s idea of “fair and open competition” seems to be more like the opposite, a protected place where AMD somehow gets awarded a bigger share of the pie while being able to charge Intel-like prices for its products.

whether you think Intel is a communion of saints, or dominion of demons, you can rightly be skeptical about that.

AMD might win its U.S. lawsuit against Intel. It’s more likely, even probable, that the EU regulators will eventually take action against Intel, simply because the EU standard of “abuse of a dominant position” is a lower standard of guilt than the US “illegal acts of a monopoly,” but nothing that will benefit AMD will occur for years to come.

But AMD’s biggest reason for its lack of success isn’t Intel; it’s AMD. Until they can compete against Intel with products as good or better (NOT cheaper) than Intel’s all the time, not just in occasional spurts when Intel screws up, they’re not going to be a successful company.

Ed


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